Market Commentary – October 15, 2021

Kevin Jock

18th October 2021

The US stock market had its best day since March on Thursday, as investors’ worries about inflation and potential interest rate increased were tempered by upbeat corporate earnings reports. The S&P 500 closed 1.71% higher, its biggest one-day rise in seven months. The Nasdaq index added 1.73% as well, its best day since May. On the other hand, Citigroup and Bank of America posted quarterly earnings that beat analysts’ estimates as both US companies released funds from bad loan reserves in a sign of growing confidence in borrowers’ abilities to repay.

European shares rose on Thursday as well, with the chipmakers including ASML and BE Semiconductor were among the top gainers in the tech sector after Taiwan chip giant TSMC posted a 13.8% jump in third-quarter profit due to booming demand for semiconductors. The FTSE 100 index, CAC 40 and DAX all ascended by 0.92%, 1.33% and 1.4% respectively.

Elsewhere in Asia, Japan’s Nikkei 225 jumped to a more than two-week high on Friday and it climbed 3.64% in this week, led by gains in high-tech shares which gave big energy to the market today. Meanwhile, the Chinese shares ended higher as well, supported by gains in tech and financial firms, but sentiment remained cautious as investors balanced expectations of policy easing against worries of a slowing economy. At the close, the Shanghai Composite index was up 0.4% at 3,527.37.

Brent crude continued to escalate to $84.48 a barrel on Thursday, hovering around a three-year high hit earlier in the week as a European natural gas shortage continued. On the other hand, the Turkish Lira hit a record low overnight after President Erdogan ordered a new round of dismissals at the country’s central bank, by removing two deputy governors. Lira is already under pressure owing to a strong US dollar and investor concerns about Turkey’s economic and foreign policy, fell to 9.18 to the dollar.


Figure 1 (Source: IS Prime) USDTRY Daily : Outflow in the Lira gains steam following the dismissal of two deputy central bank governors. The currency had depreciated 59% since the start of 2018.

Headliner to Review

  • The newly released FOMC Meeting Minutes described the fact that the Fed could begin reducing the pace of its monthly asset purchases as soon as mid-November, as well as the indication of a monthly reduction of $10bn in Treasury and $5bn in mortgage-back securities.
  • Australia’s employment details came out to be mixed, with the number of employed people decreased by 138K in September, accompanied by a modest uptick in the unemployment rate to 4.6% from 4.5% recorded in August.

Headliner to Watch

  • The Chinese quarterly GDP is due to release in next Monday, with the previous quarter of an expansion of 7.9%. However, due to the restriction of electricity supply and power shutdowns, GDP forecasts have been downgraded by the market consensus.
  • New Zealand quarterly GDP is also expected to come out with the previous quarterly figure of an increase of 1.3%.

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Antony Tan
Kerry Man